Gov. Paterson's emergency budget would end New York state deficit -- without borrowing money

View full sizeAP Photo/Mike GrollNew York Gov. David Paterson arrives at the Capitol in Albany on March 3.

ALBANY, N.Y. — Gov. David Paterson’s emergency spending bill released Friday would force the Legislature to cut aid to schools and other long-protected programs and to finally accept his efforts to cap local property taxes and free the public universities to set their tuition increases.

The bold stroke to put the long blocked policy changes into the last weekly emergency spending bill on Monday would force lawmakers to accept the policy changes or shut down government.

Baruch College politics Professor Doug Muzzio said Paterson, a lame duck governor even rank-and-file lawmakers once said should resign over scandal and for incompetence, has emerged as “Lazarus on steroids.” “Not only did he rise from the dead, he rose mightily from the dead and he’s smiting his enemies. It’s almost Biblical,” Muzzio said.

Paterson’s plan would eliminate the state’s $9.2 billion deficit and allow wine to be sold in grocery stores while temporarily ending an exemption on the state’s 4 percent sales tax for clothes and shoes costing less than $110.

Paterson’s plan also would empower the State University of New York and City University of New York to set their own tuition to a maximum each year up to 8 percent a year for doctoral degree granting colleges and up to 5 percent a year for others. But Paterson also would increase the Tuition Assistance Plan cover about half the increase to help poorer students, a major concern for powerful Assembly Speaker Sheldon Silver.

Opposition was swift. “College students take the biggest hit,” said Blair Horner of the New York Public Interest Research Group. “The poorest students take the most savage hit.”

He said the proposal would end New York’s policy to use the Tuition Assistance Plan to make sure the poorest students pay no tuition. Under Paterson’s proposals, the poorest students would pay at least hundreds of dollars of tuition. In addition, higher education would see a $180 million cut in funding, a slight restoration of the $210 million cut he proposed in January.

In the critical area of school aid, Paterson would restore $300 million of the $1.4 billion, or 5 percent, cut he proposed in January. The Assembly’s Democratic majority sought to restore $600 million. About 40 percent of the restoration would go to New York City schools.

His 4-percent cap on the growth of local property taxes, mostly from school districts, has been tried since Republican Gov. George Pataki was in office but thwarted by the state’s powerful teachers’ unions. Paterson’s latest version, however, allows school boards to override the cap with a two-thirds vote.

“This is not a cap, it’s a funnel,” said E.J. McMahon of the fiscally conservative Empire Center for New York State Policy. You have to give the people the power to override, not the board that wants to raise taxes.”

In all, the state budget that could be completed with the adoption of the emergency bill on Monday would result in about a $136 billion budget, not including the $2 billion that was rolled into the current fiscal year to balance the 2009-10 budget. The Paterson administration estimates the new budget will increase about .05 of 1 percent, by far the smallest increase in years.

There was no immediate comment from the Legislature where strong opposition has previously killed Paterson’s effort to enact to cap local property tax growth to about 4 percent a year and to Paterson’s “empowerment” plan for the SUNY and CUNY. Paterson and legislative leaders will negotiate the bill during the weekend, which likely will result in some changes.

Paterson has resorted to putting pieces of the 2010-11 budget, mostly with the Legislature’s general agreement, into the weekly emergency spending bills. The bills have been needed because budget negotiations stalled on the budget that was due April 1.

“I am willing to listen to alternative solutions to New York’s budget crisis, and will continue to listen to suggestions from the Legislature over the next 48 hours,” Paterson said. “However, while the door remains open for negotiation, it will not be on Albany time, where deadlines only exist to be extended or ignored.”

The Senate’s Democratic majority will continue negotiations to pass a “fair budget” by Monday, said Austin Shafran, spokesman for the Senate Majority Conference. “We are committed to sparing our schools from the most devastating cuts, ensuring that our higher education system remains accessible to all New Yorkers, and providing much-needed property tax relief,” Silver said.

In other parts of the bill, Paterson would:
• Allow wine to be sold in grocery stores, for $150 million in estimated revenue. But a system would be used to minimize the loss of business to liquor stores.
• Incorporate the already approved $1.60 per pack increase in cigarettes.
• Require sales tax be paid by customers of online hotel reservation services that find customers for unused hotel rooms.